The Chancellor will today set out the UK’s plans to become the world’s first net zero aligned financial centre and welcome climate commitments from private companies covering $130trn of financial assets, as he hosts Finance Day at COP26.
Convening the largest ever meeting of finance leaders on climate change, Rishi Sunak will set out the UK’s “responsibility to lead the way”.
Under the proposals, there will be new requirements for UK financial institutions and listed companies to publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards to a net zero economy by 2050.
To guard against greenwashing, a science-based ‘gold standard’ for transition plans will be drawn up by a new Transition Plan Taskforce, composed of industry and academic leaders, regulators and civil society groups.
The move has been welcomed by Rain Newton-Smith, CBI chief economist. She said: : “The establishment of the Sustainability Standards Board, as well as the Chancellor’s announcement for firms to publish net zero transition plans, are steps in the right direction.
“These need to be followed up with further action from policy makers to develop globally consistent climate and sustainability disclosure standards.”
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In his opening keynote at Finance Day, Sunak will hail the progress made to “rewire the entire global financial system for net zero” under the UK’s leadership of COP.
The financial commitments come from over 450 firms from all parts of the industry, based in 45 countries across six continents, and have been delivered through the Glasgow Financial Alliance for Net Zero (GFANZ).
The UK has also worked as chair of the G7, and in partnership with other G20 countries, to ensure all economic and financial decisions take the risks of climate change into account.
The UK Government has convened over 30 advanced and developing countries from across six continents and representing over 70% of global GDP to back the creation of a new global climate reporting standards by the IFRS Foundation to give investors the information they need to fund net zero.
Sunak will urge financial firms to “mobilise private finance quickly and at scale” and call on governments to enact bold climate policies to take advantage of these enormous financial resources.
The UK will seek to address barriers to finance faced by developing countries with a series of new green initiatives funded from its international climate finance (ICF) commitment, including £100m to respond to recommendations from the UK co-chaired Taskforce on Access to Climate Finance to make it faster and easier for developing countries to access finance for their climate plans.
In total, the UK plans to spend £576m on a package of initiatives to mobilise finance into emerging markets and developing economies, including £66m to expand the MOBILIST programme, which helps to develop new investment products which can be listed on public markets and attract different types of investors.
The Chancellor will also announce the launch of an innovative new financing mechanism – the Climate Investment Funds’ Capital Markets Mechanism (CCMM) – aimed at boosting investment into clean energy, like solar and wind power, in developing countries.
The UK is already the biggest donor to the multilateral Climate Investment Funds, having contributed £2.5bn, and will now give the returns from its investments to CCMM.
This new fund will use reflows to help it issue green bonds worth billions of pounds in the City of London and could leverage an extra $30 to 70 billion from other sources for specific clean energy projects.